FTC proposes 'Do Not Track' tool for Web surfers (Update 2)

(AP) -- Federal regulators are proposing to create a "Do Not Track" tool for the Internet so that consumers could prevent marketers from tracking their Web browsing habits and other online behavior in order to target advertising.

The proposal, inspired by the government's existing "Do Not Call" registry for telemarketers, is among the recommendations outlined in a privacy report released Wednesday by the Federal Trade Commission. The report lays out a broad framework for protecting consumer privacy both online and offline as personal data collection becomes ubiquitous, often without consumers' knowledge.

The FTC hopes the report will guide the marketing industry as it develops self-regulatory principles to define acceptable corporate behavior. The FTC also is trying to influence policymakers as they draft new rules to protect privacy. The agency has limited authority to write those rules itself, so new regulations would likely require congressional action.

Safeguarding consumer privacy, the agency says, is critical since marketers are increasingly analyzing the websites that consumers visit, the links they click, their Internet searches, their online and offline purchases, the physical locations of their wireless devices and all sorts of personal information they disclose on social networking sites.

So far, FTC chairman Jon Leibowitz said, the marketing industry has not done nearly enough to make sure people understand what personal information is being collected, or to provide them adequate control over that data collection.

The agency envisions a Do Not Track tool as one important way to let consumers opt out of much of the tracking marketers do to help them serve more relevant ads, a practice the industry calls behavioral advertising. The tool would most likely take the form of a Web browser setting that informs websites when tracking and serving targeted advertising are off limits, even as the Web surfer jumps from site to site.

The concept is loosely based on the FTC's National Do Not Call Registry, which was launched in 2003 and has been widely credited for allowing Americans to eat their suppers in peace. More than 190 million people have listed their phones on the registry, which prohibits calls from telemarketers. Violating the registry subjects telemarketers to civil penalties up to $16,000 per violation.

Leibowitz, who first floated the idea of Do Not Track last summer, said that although the technology has not yet been widely deployed for consumers, browser companies are experimenting with it. And lawmakers do appear interested. Bobby Rush, chairman of the House Commerce subcommittee that deals with consumer protection issues, will hold a hearing on potential Do Not Track legislation on Thursday.

Still, the industry remains wary. For one thing, said Mike Zaneis, senior vice president and general counsel for the Interactive Advertising Bureau, allowing consumers to turn off all online tracking could have unintended consequences since tracking is used to deliver all sorts of personalized Web content - from sports scores to stock prices - and not just online ads. He added that while the concept of extending Do Not Call to the Internet sounds appealing, the analogy has limits since it is much easier to put a phone number on a Do Not Call list than it is to limit tracking on the many separate networks that make up the Internet.

On the whole, however, Zaneis said he is pleased with the FTC report since it does encourage industry self-regulation. A number of leading advertising trade groups, including IAB, recently launched a program that places an icon inside the online ads of participating advertising companies. Clicking on the icon takes consumers to a Web page that provides information about data collection practices and gives people the opportunity to opt out of behavioral advertising conducted by those companies.

The new FTC report comes at time of mounting concern about Internet privacy in both Washington and Europe.

The National Information and Telecommunications Administration, part of the Commerce Department, is also preparing a report on the issue. And the Obama administration's Office of Science Technology Policy has created a new group to develop broad principles on online privacy to guide legislative action and regulatory policy.

Meanwhile, last month the European Union said it plans to update its privacy regulations to give consumers more control over online tracking.